THE SINGLE MARKET: This is the removal of obstacles, such as customs checking, to allow the free movement of goods, services, capital and persons (such as labour) through the area.

 

About The Single Market: 

 

Set by the Treaty of Rome in 1957, they set out four economics freedoms that they wanted to create in Europe:

 

• Free movement of goods

• Free movement to provide services

• Free movement of capital

• Free movement of people

 

This was done since the Maastricht Treaty (February 1992) that created the European Monetary Union.  The commission has focused on liberalising the market in order to make it more competitive via the Lisbon Strategy.

 

An Evaluative 25 marker on The Single Market is a great possibility and there have listed the Benefits and Costs of it in case it does come up.  If you know they stuff down below, there’s no reason why you would be able to get Full Marks.  It’s the perfect question to bring in a few good graphs, even if they’re simple as well as a lot of general knowledge regarding current affairs.

 

BENEFITS OF THE SINGLE MARKET:

 

• Economies of Scale: With over 480 Million consumers involved in the European Union across the European countries along with almost 40% of the world trade there is a MASSIVE scope for countries who have the chance to exploit economies of scale. 

 

• There can also be a successful division of labour which would lead to a rise in efficiency and productivity:  By having free movement of all 4 factors of production between member countries it means that there is a more efficient allocation of resources along with further increasing productivity.

 

• Dynamic Efficiency: This will also have a chance to increase as in a competitive environment, monopoly power will fall whilst innovation increases.  Inefficient firms will suffer a loss of market share.

 

• The increase in competition: This is a great advantage for consumers as they will be receiving cheaper products, increased choice, consumer sovereignty which, leads to an increase in consumer surplus! [CHAIN OF ANALYSIS]

 

 

• Increased liberalisation: This has meant that there are cheap airline tickets for example, Easy Jet and Ryan Air. This would have been impossible without the existence of a single market.  The main reasons why it Is, is due to the fact that lower electricity costs are available to both firms and consumers in states where the market has been opened up to competition.

 

 

• Reduction in export bureaucracy: This means that there has been a decrease in the rule and regulations that are in place in regards to exporting goods.  This is due to opening of boarders along with a fall in costs.  For example:  There is no restriction on buying alcohol in France to bring to the UK as long as it is for personal use.  This basically make the Single Market a domestic market for European businesses.  

 

• UK citizens: They have the right to work, study or retire in all other member states.  From statistics gathers from the national migration tables of 1991-2006, there are around 750,000 Britons living in member states.  This has bound to have increased over the past 8 years.

 

COSTS OF THE SINGLE MARKET:

 

• Adverse impacts: There may be some sectors of the national economy where an increase in competition simply drowns out small firms to leave the market.  This would lead to a loss in jobs.

 

• Gaps left: There are still gaps in The Single Market as it is still a work in progress. For example: in areas such as Intellectual Property Rights, Services, Transport and Energy etc.

 

• The service sector: This sector has open a lot more slowly than the market for goods.  A new law was adopted in 2006 that allowed firms to offer a range of cross-border services from their home country, but competition has still not increased as much as it was hoped.

 

• Delays: Time lags are great evaluation point too, as they have also effected financial services and transport due to separated national markets till existing.  The markets for gas and electricity have also not opened up completely yet due to promotion of the service from their own countries. 

 

• Different Tax System: The fragmented tax system means that the tax rates over Europe are not universal and all vary.  This makes it very different to share the same prices in different regions.  This puts market integration and efficiency on a standstill.

 

• Most Financial services have been liberalised: As a result, in 2007 EU ministers agreed to unify the national payments regimes. This would make it easier for consumers to use credit or debit cards abroad and to transfer money to another EU country.  This is not necessarily a good thing as it would be considered a withdrawal from the circular flow of income.